- Fraud has increased for 42% of UAE organizations
year-on-year.
- For the first time in EMEA, digital channels account for more
fraud losses than physical channels.
- Almost all UAE organizations say fraud is affecting their
customer conversion rates.
DUBAI, UAE, April 17, 2024 /PRNewswire/ -- LexisNexis® Risk
Solutions has unveiled the findings of its 2023 LexisNexis® True
Cost of Fraud™ Study – Europe,
Middle East and Africa. The annual report, based on a
commissioned survey conducted by Forrester Consulting, reveals that
businesses in EMEA now bear a cost of fraud that is 3.90 times the
face value lost in fraudulent transactions.
In the UAE, 42% of companies reported an increase in fraud in
the 12 months prior to the survey, while organizations incur an
average cost of AED$4.19 (AED$3.62 for retailers and AED$4.99 for
financial institutions) for every dirham lost to fraud. These costs
encompass financial losses due to fraud, as well as internal labor
expenses, external costs, interest and fees, along with the
expenses associated with replacing or redistributing lost or stolen
merchandise.
While rapid adoption of digital payments not only improves
payment experiences, it also exposes numerous systems and channels
to more innovative fraud attacks. Across EMEA, digital channels
account for 52% of overall fraud losses, surpassing physical fraud
for the first time. Consequently, cybercriminals exploit the
anonymity of digital, cross-border transactions to execute fast and
untraceable fraud. Additionally, the rise of scams and the use of
technology, such as artificial intelligence (AI), expands
cybercriminals' ability to exploit both consumers and
businesses.
The study also reflects the evolution of criminal tactics. More
than half (52%) of businesses in EMEA identify the rise of
synthetic identities as the primary challenge in customer identity
verification. Fraud remains a widespread problem for businesses,
exerting pressure not only on financial resources but also
impacting overall operational efficiency, customer trust and
reputation.
"It is self-evident that new forms of fraud increase the risk
of financial losses for consumers and businesses," said
Jason Lane-Sellers, director, fraud
and identity, EMEA at LexisNexis Risk Solutions. "The
issues facing businesses become even more challenging due to the
fraud multiplier effect, where the losses experienced by
organizations continue to increase and far exceed the lost face
value in any transaction. Preventing fraud requires a multi-layered
approach throughout the customer journey."
Key Findings from the True Cost of Fraud Study – Europe, Middle
East and Africa:
- Commercial Impact: Fraud significantly affects how
customers perceive and interact with businesses. Ninety-two percent
(92%) of UAE respondents report that fraud has influenced customer
satisfaction compared to 75% across EMEA. Ninety-six percent (96%)
notice its impact on customer conversion, higher than the 71%
recorded in EMEA. These findings demonstrate that the UAE has a
particular sensitivity to customer experience. Any impact of fraud
or fraud prevention techniques can affect customer satisfaction and
lead to broader impacts on companies' bottom line, so balancing
prevention with appropriate customer experience controls is
essential.
- Evolving Fraud Management Practices: Criminals
constantly innovate. This dynamic nature of criminal behavior means
that fraud and its associated costs are not static threats that
businesses can simply diminish. For instance, new payment methods
provide fraudsters with opportunities to exploit vulnerabilities in
the retail sector. Financial institutions are realizing increasing
trends in identity theft, scams and digital wallet fraud.
- Moving Forward: Given the rising threat of fraud and
cybersecurity risks, organizations should embrace forward-thinking
fraud management and authentication solutions. This involves
leveraging the capabilities of technologies such as AI, machine
learning, and biometric and behavior-based authentication
methods.
Methodology: The True Cost of Fraud Study –
Europe, Middle East and Africa conducted a survey of 1,845 global
fraud management decision-makers at financial institutions and
retail companies, including 55 in the UAE. Data collection and
survey questions reference a 12-month period. The study leverages
data and analysis to understand the current state of fraud and the
challenges associated with digital payments in emerging markets.
This information comes from a commissioned study conducted by
Forrester Consulting on behalf of LexisNexis Risk Solutions in
August 2023.
Download the LexisNexis® True Cost of Fraud™ Study –
Europe, Middle East and Africa.
About LexisNexis Risk
Solutions
LexisNexis® Risk Solutions
includes seven brands that span multiple industries and sectors. We
harness the power of data, sophisticated analytics platforms and
technology solutions to provide insights that help businesses
and governmental entities reduce risk and improve decisions to
benefit people around the globe. Headquartered in metro
Atlanta, Georgia, we have offices
throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a
global provider of information-based analytics and decision tools
for professional and business customers. For more information,
please visit LexisNexis Risk Solutions and RELX.
Media Contact:
Ade O'Connor
+44 7890 918 264
ade.o'connor@lexisnexisrisk.com
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